That's despite a 12.6% average drop in the last 12 months, and a 2.7% average decline this quarter.
QV national spokesman Simon Petersen says if residential property values continue to fall at their current rate, it could still take up to two years to hit their pre-pandemic level nationally. “That’s a pretty big ‘if’, with the market expected to stabilise before then.
“While not strictly comparing apples with apples because of the high inflationary environment, it does illustrate a housing market transformed by Covid and the economics surrounding the management of it,” he says.
On a more localised, regional level, Petersen says Wellington had been the hardest hit of the main urban centres by the residential property market’s downturn to date.
The latest HPI figures show the average home value has fallen across the wider region by 21% since February last year to reach $854,092 at the end of last month – a figure that is still $109,609 or 14.7% higher than when the pandemic began.
Home values remain more than $100,000 higher across the Wellington region than they were three years ago.
In Christchurch and Auckland, the pre-pandemic difference in dollar terms is still upwards of $200,000. “So, clearly there’s still some way to go if the residential property market’s correction continues unabated,” Petersen says.
“That remains to be seen in the longer term, but the Reserve Bank’s latest increase to the Official Cash Rate (OCR) will almost certainly see it maintain its current downward trajectory for the time being.”
Meanwhile, the largest drops in home value across the main urban centres in the three months to the end of February were in Rotorua (-5.5%), Auckland (-4%), and Palmerston North (-3.9%), with all three posting larger declines in the most recent set of QV figures than in the last.
Wellington (-3.4%) and Hastings (-3.1%) round out the top five, with property values in the South Island holding up much better on average than those in the north; Nelson (-0.6%) and Invercargill (-0.8%) had the smallest home value reductions on average this quarter.
“Rising interest rates and credit constraints continue to have a tight strangle-hold on the market, as they have had for more than a year now,” Petersen says.
“Many prospective home buyers are either unable or unwilling to buy property while the cost of servicing a home loan is so high. Others are waiting to see when the market will bottom out, which obviously hasn’t happened yet,” he says.